The New York Yankees of the 1950s and the Chicago Bulls and Dallas Cowboys of the 1990s have two crucial elements in common: organizations and performance that are both consistently excellent. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.
Build the next investing dynasty
These long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them is the mission of our Motley Fool Income Investor service.
Petroleo Brasileiro (NYSE: PBR ) , for example, has returned nearly 93% since August 2007, and is currently rewarding investors with a 1.7% yield. Or consider The Southern Company (NYSE: SO ) , which has returned almost 43% since November 2003, atop a current 4.4% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.
Identify new talent
With the help of the free and open-to-all Motley Fool CAPS community, we'll search for the best dividend-paying stocks around. Here are several dividend picks that have also earned high ratings from the 82,000-plus CAPS members:
|
Company
|
Yield
|
CAPS Rating
|
|
Alcoa (NYSE:AA)
|
2.2%
|
****
|
|
Boeing (NYSE:BA)
|
2.1%
|
****
|
|
Johnson & Johnson (NYSE:JNJ)
|
2.5%
|
*****
|
|
Verizon (NYSE:VZ)
|
4.5%
|
****
|
|
Norfolk
Southern (NYSE:NSC)
|
2.6%
|
*****
|
Source: Capital IQ, Yahoo! Finance, and CAPS as of Jan. 24.
Stake your claim
You can expect that as an Income Investor pick, Johnson & Johnson has a pretty solid dividend policy. In fact, it has a 45-year history of dividend growth, which is pretty darn impressive. The company's dividend growth means that investors who bought shares back in 1970 are currently collecting annual dividends on those shares that are much larger than what they originally paid for the shares. Now that's return on investment!
That's not the only reason to consider J&J though. In the highly volatile market environment of today, the company can offer a much-welcomed dose of stability to your portfolio. You may not be able to expect the stock to double in a year, but it's likewise highly unlikely that the woes affecting the rest of the market will take a huge bite out of J&J.
There are a lot of Fools on CAPS who have given J&J the ol' thumbs-up, including jawilde, who chimed in on the company on Thursday:
Whether it's the aging U.S. population or growing middle class in emerging markets, health-care spending will continue to increase. [J&J,] as the largest diversified health-care company in the world, is a dominant player in multiple areas. With a P/E [less than] 16 and a yield approaching 3%, a total return of 12% to 15% appears reasonable. Throw in a wide economic [moat], low business risk and excellent management and this is a "sleep well at night" investment.
You can check out who else has been bullish on Johnson & Johnson, as well as post your own thoughts by heading over to CAPS. While you're there, you may also want to check out a few of the other top-rated dividend payers listed above.
Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins into the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
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